Long term leases were always a risky option for businesses, especially for startups that aren’t too far into their launch and are still struggling to find their place in the market. But a lot of companies still opt for long term leases thinking mistakingly that the longer the lease: the more cost effective it must be, the more it increases company moral, and better on the management the lease becomes.
In the pre-pandemic times, it was debatable whether long term leases are a good/risky idea for a company- factors including company size and growth opportunity. Now, because of the effect COVID-19 has had on the world, it’s certain that long term leases are rarely a good fit for your company. If you’re still on the long-lease support team and want to buy a lease for the next 8-10 years, here’s why you shouldn’t, and how a coworking space can save you time, money, and build a better company culture
The Market is Unstable
Long-term leases are deemed as the startup killer because businesses can never predict their growth, how much space they need, how much employees they’ll have, or if they’ll even exist in the next 5 years. Especially with COVID-19, you never know when people will be able to return to normal work hours and when a situation like this may arise again.
With instability, CEOs are looking for flexible office spaces that can expand and contract depending on the market and on the needs of the company at that given time. A flexible office allows CEOs and CFOs to manage variable costs as markets and individual needs change. An office with 50 employees may only need an office for 25-30 if only half the team comes in on a given day. As soon as the office wants to either expand the office size, or send more people to work from home, the office and the balance sheet will reflect that decision. This is just not possible in fixed 10 year office lease.
Your Employees Want to Work from Home
Working from home was deemed a hazard for a business for a very long time. People thought there was no hope for efficiency and productivity if employees worked from their homes. Well, now the same companies that said the jobs weren’t remote, are now getting the job done remotely. It goes to show how there can be a certain amount of flexibility regarding where people should be working and the need for big offices could be completely eliminated in the near future.
While productivity is possible from home, this furthers increases the need for a flexible office plan that can adjust as employees balance part time remote and part time in-office – the new standard in the workspace.
Long-term leases are a thing of the past- not matter the size of your company. You should instead try opting for short leases with the option to renew.